Tax inspection underway in Civilitas Foundation investigation.

EU Special Representative for the South Caucasus and the Crisis in Georgia, Philippe Lefort, along with the Head of the European Union Delegation to Armenia, Traian Hristea, meeting Vartan Oscanian at the Civilitas Foundation in February 2012.

Maintaining the political nature of the charges laid against the Civilitas Foundation, an Armenian think tank, and its founder, former Foreign Minister and prominent member of the opposition Prosperous Armenia Party (BHK for its initials in Armenian) Vartan Oskanian, have requested the court end the criminal investigations into the organisation’s activities.

As reported previously in CEW, the National Security Service (NSS) of Armenia launched a criminal investigation into the alleged tax evasion and money laundering of an almost $2 million gift from two American firms, Polymer Material and Huntsman International, both owned by U.S. businessman John Huntsman, to the Civilitas Foundation earlier this year.

The NSS claimed that the Civilitas Foundation had failed to alert the relevant tax authorities to the donation. It is estimated that Huntsman has spent about $18 million since the 1988 earthquake in Armenia on reconstruction activities in the northern parts of the country which were severely devastated by the disaster.

The investigation was launched the 25 of May – the day after the Prosperous Armenia Party announced the withdrawal of its support for the ruling coalition.

Both the NSS and the government have denied a political motivation behind the investigation. Furthermore, the NSS has expressed frustration with Oskanian who has exercised his right not to testify in this case.

According to Salpi Ghazaryan, Civilitas has submitted its paperwork to Armenia’s State Revenue Committee which began a detailed tax inspection of the non-profit on 3 July. The tax inspection is expected to last until the 27 of this month.

Ghazaryan implied, at a press conference last Thursday, that the inspectors have yet to come up with any evidence that would point to tax evasion or other wrongdoing. She mentioned that Civilitas from the beginning has regarded operating within the legal framework and practicing transparency as very important to the foundation and its activities.

She continued that “it looks like things are going well in accordance with our expectations,” concluding that the foundation’s financial documents are in order thus proving that the allegations are baseless.

Tigran Atanesian, a lawyer for Oskanian, considers that the case should be dropped considering the NSS has made no mention of the criminal origins of the original donation from Huntsman. Additionally, the lawyer also highlighted serious violations in procedure during the initiation of the criminal investigation.

However, Oskanian’s lawyers, despite appealing the court’s decision, are not particularly optimistic about the success of their appeal. Artur Grigorian, another of Oskanian’s lawyers, told Radio Free Europe that, “Our chances of success are not high for the simple reason that the entire judicial system has to work to somehow substantiate that criminal case.”

Civilitas, according to its website, aims to foster prosperous democracy and full civic participation for all in Armenia as well as to contribute to the peace process in the Caucasus region.

Report prepared for CEW by Karina Gould with additional reporting from Radio Free Europe and news.am.